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Exercise 3 Fancy Foods produces two types of microwavable products: beef-flavored ramen and shrimp-flavored ramen. The two products share common inputs such as noodle and
Exercise 3 Fancy Foods produces two types of microwavable products: beef-flavored ramen and shrimp-flavored ramen. The two products share common inputs such as noodle and spices. The production of ramen results in a waste product referred to as stock, which Fancy dumps at negligible costs in a local drainage area. In June 2014, the following data were reported for the production and sales of beef-flavored and shrimp- flavored ramen: Joint Beef Remen Shrimp Remen costs (costs of Joint Cost $400,000 noodles, spices, and other inputs and processing to split-off point) Beginning Inventory 0 0 Production 20,000 28,000 Sales 20.000 28000 Selling Ton SS $20 Due to the popularity of its microwavable products, Fancy decides to add a new line of products that targets dieters. These new products are produced by adding a special ingredient to dilute the original ramen and are to be sold under the names Special B and Special S, respectively. Following are the monthly data for all the products: Beef Remen Shrimp Remen Special B Specials Joint costs (costs of Joint Cost $400,000 noodles, spices, and other inputs and processing to split off point) Separable costs of processing 20,000 tons of Beef 100,000 Ramen into 25,000 tons of Special B Separable cost of processing 28.000 tons of Shrimp $238000 Ramen into 34,000 tons of Specials Beginning Inventory Production 20,000 28.000 25000 34000 Transfer for further 20,000 28000 25000 34000 processing Selling Ton SS S20 17 Required: Calculate Fancy's gross-margin percentage for Special B and Special S when joint costs are allocated using the following: a. Sales value at split-off method b. Physical measure method c. Net realizable value method 0 0
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